INSTANT VIEW-US payrolls growth slows in May, unemployment rate steady

NEW YORK, June 5 (Reuters) - U.S. job growth slowed in May, while the unemployment rate held steady, potentially giving the Federal Reserve a buffer to delay the resumption of interest rate cuts.

Nonfarm payrolls increased by 139,000 jobs last month after rising by a downwardly revised 147,000 in April, the Labor Department said on Friday.

Economists polled by Reuters had forecast 130,000 jobs added last month after a previously reported 177,000 advance in April.

The unemployment rate held steady at 4.2% and matched expectations.

MARKET REACTION:

STOCKS: S&P 500 E-minis EScv1 added to gains and were up 47.25 points, or 0.79%

BONDS: The yield on benchmark U.S. 10-year notes US10YT=RR rose 6.3 basis points to 4.458%, the two-year note yield US2YT=RR climbed 6 basis points to 3.987% FOREX: The dollar index =USD extended gains a loss and was up 0.51% to 99.18, while the euro EUR=EBS was down 0.45% at $1.1393

COMMENTS:

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN

"The rise in payrolls was better than expected, but the previous months were revised significantly lower, taking some sheen off this report. The diffusion index for manufacturing was abysmally low, showing that payroll gains are concentrated while losses are widespread. On its face, this shows an economy that’s holding up under the weight of a trade war, but the details show plenty of cracks forming."

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“Payrolls came in a little higher than consensus and more than I was looking for, but basically with the exception of hourly wages, the report really doesn't indicate that the Fed would be ready to do anything to help out the labor market.

“In fact, the rise in hourly wages by 0.4% - I don't want to say significant, but it's noticeable. And so that you know just means that the Fed stays on hold and the labor market, although there are definitely signs that it's cooling and obviously that's attributed to the trade war because many people are not hiring due to the uncertainties.

“Bottom line, it’s a report that's not going to move the markets very much and I would, I would classify this as a mediocre report.”

JAMIE COX MANAGING PARTNER, HARRIS FINANCIAL GROUP, RICHMOND VIRGINIA:

"The labor market is strong, but cooling. I expect this report, with all its revisions to bring the Fed back into cutting mode in July. Wages are stable, for now, but that is likely to change in the coming months.

"One of the biggest factors with labor is housing - the housing market is showing early signs of trouble, and a cooling labor market will make that worse."